Make-take structure and market quality: Evidence from the U.S. options markets

Amber Anand, Jian Hua, Tim McCormick

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


We examine the make-take structure, which compensates liquidity suppliers and charges liquidity demanders, in the options markets where it competes with a traditional structure that uses payments for order flow. Using the introduction of the make-take structure as an event, we find that execution costs (including fees) for liquidity demanders decline after the event for the affected options, that the make-take structure encourages market makers to improve quoted prices, and that brokers change their routing behavior to include fees in the routing decision. The decline in execution costs is consistent with the benefits of the increased quote competition from the make-take structure prevailing over the fees the structure charges to liquidity demanders.

Original languageEnglish (US)
Pages (from-to)3271-3290
Number of pages20
JournalManagement Science
Issue number11
StatePublished - Nov 2016


  • Maker-taker pricing
  • Microstructure
  • Open markets
  • Securities

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research


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